When it comes to fund returns, we must first know the types of funds, which is closely related to fund returns. The following are the types of fund income compiled by Bian Xiao for everyone, hoping to help you!
On the types of fund income
1. Interest income. The fund will certainly keep a certain percentage of cash to prevent investors from redeeming the fund shares. Generally, 5% of the funds in Taiwan Province Province should be kept in cash, but the proportion in the United States is different.
These cash are deposited in banks or other financial institutions, so there will be interest income every once in a while.
In the United States, if investors invest in money market funds, the investment target of the fund is commercial promissory notes, negotiable certificates of deposit or other short-term bills, and the income is entirely interest.
2. Dividend income
Except for bond funds or money market funds, all other investment funds put their money into the stock market to buy stocks. According to the operating conditions, listed companies will pay dividends to shareholders regularly.
Funds holding shares in listed companies, that is, their shareholders, can naturally get dividends.
3. Capital gains
Funds can invest in stocks according to the principle of "buy low and sell high", and get rid of their marketable assets (including securities such as stocks and bonds) at the most favorable time to earn profits, which is capital gains.
4. Capital appreciation
When the manager company operates the fund, the net asset value of the fund will continue to increase due to the appreciation of the securities invested and the continuous income of the investment.
After investors have invested in the fund for a period of time, the net asset value of the fund units they hold has increased to a certain extent relative to the net asset value at the time of investment, which is the capital appreciation of the fund.
Advantages of investment funds
1, diversify investment
No matter how much money you have, investors should follow the important principle of diversification. However, due to the limited amount of funds, if ordinary investors want to fully diversify their investments and hold different types of stocks, bonds and other investment products, the final effect may be counterproductive and go to the other extreme-excessive diversification, which leads to the failure to guarantee the return on investment. Especially if there is no corresponding professional skills to invest, the risk loopholes are even greater. By buying the same fund, investors can get a completely diversified portfolio immediately. Of course, if you can't diversify all your personal assets by buying only one fund, you still need to hold multiple fund products with different styles and investment directions.
2. Scaling effect
Like other industries, if you buy more things in large quantities, you can get more discounts from merchants. * * * With the huge capital operation of the same fund, they can get lower transaction commission from brokers, which can greatly reduce transaction costs. Imagine that if your portfolio has the size of 10 ~ 20 stocks, you should not only pay the normal transaction cost for each stock, but also pay the cost for each transaction when you need to adjust your portfolio. Finally, after deducting all the accumulated transaction costs, your return on investment may not be as good as it looks. The transaction cost and frequency of investment funds are much smaller.
3. Strong liquidity
* * * As strong as the liquidity of funds and stocks, investors can buy and redeem funds at any time. From the perspective of liquidity, investment funds have significant advantages over investing in real estate or other real estate. Moreover, investors can also buy funds in bulk, and will not be unable to engage in investment activities because of limited temporary funds.
4. Expert financial management
Compared with most investors, fund managers should be called experts. Their knowledge and skills in stock investment and their support for resources are far higher than those of ordinary investors. Let fund professionals help them manage their investments. Although there is no guarantee that their performance will be outstanding, it will basically be much better than "betting" or idling their funds at will.
Main types of investment funds
(1) Securities investment funds
In accordance with the principle of * * * sharing benefits and * * taking risks, securities investment funds concentrate the funds scattered in the hands of investors and entrust professional investment institutions to manage securities investment with investment tools. The securities invested by the Fund are mainly those publicly traded on stock exchanges or inter-bank markets, including stocks, bonds, currency and financial derivatives.
Securities investment funds are the most important type of investment funds, which can be divided into public securities investment funds and private securities investment funds. Securities investment funds are the focus of this book.
(2) Private equity funds
Pfivateequity Fund (PE) refers to the private equity investment in private enterprises, that is, unlisted enterprises. In the process of transaction implementation, the future exit mechanism is considered, that is, through listing, mergers and acquisitions or management buyback, the shares are sold for profit.
(3) venture capital fund
Venturecapital (VC), also known as venture capital, absorbs funds from institutions and individuals in a certain way, invests in start-up or small-scale new enterprises, especially high-tech enterprises, and helps the invested enterprises to mature as soon as possible and obtain listing qualifications, thus realizing capital appreciation. Once the company's shares are listed, venture capital funds can recover their funds through equity transfer in the securities market and continue to invest in other venture enterprises. Venture capital funds generally also take the form of private placement.
(4) Hedge funds
Hedgefund, which means "hedge fund", is an investment model based on investment theory and extremely complex financial market operation skills, making full use of the leverage of various financial derivatives, taking high risks and pursuing high returns. Hedge funds generally adopt private placement and invest heavily in financial derivatives.
Hedge funds originated in the United States in the early 1950s. The purpose at that time was to use financial derivatives such as futures and options, as well as the operating skills of short selling and risk hedging related stocks to avoid and resolve investment risks to a certain extent. After decades of evolution, the operation strategy of hedge funds has been many times more complicated than the method of hedging long risks with short positions when it was first born. Although the word "hedge" is far from covering these investment strategies and methods, people are still used to calling such funds "hedge funds".
(5) Alternative investment funds
Alternative investment funds refer to funds that invest in financial and physical assets other than traditional stocks and bonds, such as real estate, securitization assets, hedge funds, commodities, gold, works of art, etc. Alternative investment funds generally adopt private placement, with a wide variety and uncertain extension. Some people bring private equity funds, venture capital funds and hedge funds into the scope of alternative investment funds.
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